Ah yes, it is certain, yesterday was surely luck . This was at first an attempt to do what I did yesterday, just basically scalp small trades. However, what I realized is that as opposed to yesterday, when I was for the most part trying to get in larger moves and just get out after a couple points, I was now trying to actually scalp it. I was only looking for those couple point moves, and missing any larger moves. Overtrading was my game today. 1240.00 +0.5 L 10:39-10:40 I did not trade in the morning, as I said in an earlier post, I just wanted to wait and see what happened. Of course, my trigger finger on the other hand did not seem to have so much patience . For this trade I did not have a reason to get in, making it a terrible trade, however I did realize this and immediately got out. I was actually proud of myself for getting out only because I knew the only reason I got in was due to impatience, but then..... 1239.50 -3 S 10:40-10:41 I got right back in, except short!!! I had not realized I could be stupid enough to first be impatient, but then to flip the position for no real reason, how moronic I must be!!! As I look at it now, it seems purely impatience was the reason for the trade, though usually it is rationalized by some slight movement, but for this I really don't see anything that would cause me to think it was a good trade. I actually set a stop of 2 points, but got filled with an extra point. 10:45-12:00 The power started shutting off briefly several times first, each time it would take me a couple minutes to get everything back up (I have a battery backup, but did not have the modem hooked to it then). Then the power went out for about and hour. Honestly, I was pretty angry since this was only my second day and now something has to screw it up. I did realize just how undependable electronics can be though, as we haven't even had power go down like that for years it seems, I suppose it was good as I will now take extra caution if power/computer/internet are acting up. I can only be thankful I was not in a trade during the time. 1255.50 +3 L 12:06-12:08 Not a bad trade, but I was still trying only for a couple points, just trying to get back to break even. I have a problem sometimes with liking to hit certain amounts, such as getting even, or just hitting $100, or $200 etc., despite whether or not I think the price will continue going up. It's quite stupid (and somewhat funny even) when I sit there and try and tell the market to just move another point so I can hit my little preset number. 1262.50 +0.5 S 12:12-12:13 Looking at the chart now this seems to be a pretty good trade, I'm not really sure why I got out after 0.5, unless maybe I just realized that there was not enough evidence of a decent pullback, and that it could continue on it's way up after just a couple minute retrace. In any case I now see (through it and other trades), that shorting small pullbacks in a clear uptrend like this is suicide in most cases. 12:26-12:45 -4.5 L 6 Trades in this time, all long (the box on the chart). This actually seems pretty impressive that I can make 6 long trades all during a small up trend, and lose on 5 of them . Actually here, had I kept the first trade (1262) and held my stop, I would have nicely caught the bottom. Of course hindsight is always great at those things. I believe this series of trades first began with a good trade, seeing that it was another swing like the two before it, and that it had just begun to head up. But then getting out after a couple minutes because it did not do anything, and I began questioning my trade, even though nothing had disproven it. Then the 5 following trades were done in anger, anger at the fact that I had gotten out and that it looked like it was still going to move. But once in I would again question myself if it dropped even 1 point. This was entirely fear and the fact that I was then only trying to scalp it, having forgotten that the reason I first got in was that it looked like about a 10 point move (as the two swings before it). Then I just repeated the process, becoming more angry that the market was beating me, and trying to prove myself correct. About the only good thing I did here was to get up and leave (got in the car and ran some errands). 1259.50 -2.5 S 2:14-2:18 Bought just after a small pullback after a large drop. Had this been a sideways day it probably would have been a legitimate trade, however as I said earlier, shorting in a clear uptrend is just plain stupid. I did actually hold to my stop though, so I guess that's one plus, I would rather lose a few and actually learn to keep my stops than break my rules get chopped every trade (as I've been doing). 1266.00 +1 L 2:29-2:29 This was more of a tests than anything, I was just curious if I could buy and sell quickly during a faster move and still make a point. Took 9 seconds. I'm glad I tested this just for my own knowledge, but I think it was a bad idea at the time as I was already having problems for the day. 1270.00 +0.5 L 3:04-3:08 Got in thinking the pullback was done and it would move again. Turned out the pullback lasted a bit longer though, and I did not want to risk holding through anything else. 1270.00 +2.5 S 3:14-3:15 As I look at this one again now, it's pretty funny as it did exactly the same thing as at 2:14 (a quick drop, a few up bar, then just a short drop and back up into a nice trend), and I did the very same thing of shorting it, despite losing last time. I was just lucky not to lose again here. 1277.50 -1.5 S 3:36-3:37 For some reason I got this idea stuck in my head that there would be some kind of drop at the end of the day. After all it had gone up all day, it can't go up even more could it??? You would think I would have learned that one by now. Maybe that is another product of this bear market, thinking that everything that comes up must come down. 1279.00 -2 S 3:39-3:40 Hmmm, maybe if I try again this market will get a clue that it needs to go down . Needless to say I was wrong again, this time there wasn't even a down bar though, it was all up, I guess I really had myself convinced that it was going to drop. Points -5.5 Trades 16 W/L 6/10 Profit after Comm. -$186.80
WooHoo!! broke 10000 characters, had to split up the post. Sorry for making it so long Summery (I want to start adding this to sum up the things I've learned through the days trades) Lessons Learned: 1. Never, never, never, never, never, never Overtrade. I'm certain I should have figured this one out with how many times I've heard it. If I make 6 trades on the same move again I think I will have to beat myself to a pulp . Also pulling that crap of flipping trades if it doesn't work one way, just downright pathetic. I wish I would have lost more just so it would hit me harder just how stupid I was. 2. Do not trade against the trend. Again, I have read this rule hundreds of times over. Hmm, should I trade for the trend move that goes 10 points in a few minutes, or the pullback that moves 5 points and chops for 15 minutes . That doesn't even make sense. I'm sure there are probably exceptions to this rule, but I surely won't be trading them for awhile. And several of my shorts I even knew it was just a pullback, it didn't even resemble anything more. This may have something to do with patience also, not wanting to wait for the next move and wanting to trade something now. 3. You don't know Jack! At least I don't . I cannot tell the market to do anything, I must simply follow along with what it does (I even said that in this mornings post come to think of it, sheesh). 4. Allow the market to give you what it will. I have a trade set up, and it begins moving in my direction, I have no reason to get out. And yet I seem to think that if I have a set target that the market will move there and no more. Worse is that the set target is based on nothing to do with the market, just the fact that I want to get to a particular amount of money and no other reason. 5. Loss of money is money well spent, as long as knowledge is gained from doing so. Today I lost $180 dollars, down $50 for two days, but the knowledge gained is beyond value. At the college of life you may trade your time and money for that which is far beyond measure or dreams. I am surprisingly happy despite the days losses and mistakes, had I learned nothing I would likely be sulking in my stupidity and waste. Emotions 1. Fear. I've had a great deal of this, not wanting to lose any of my starting capital, not wanting to have a down day in my first week, not wanting to tell anyone I had a down day. All stupid, it's part of the game, there is no perfect record, trading is all about averages, it does not matter if there is a loss, it's part of trading, without loses you won't have winner because you probably are not trading if you achieve that record. Fear is dually evil, as it will cause you to close your winning positions, and it will cause you to miss winning trades, which are needed to make up for the loses you will encounter. Fear will keep you from making insane trades, and taking insane loses, in essence, it keeps you from killing yourself. However, fear must rather be used with wisdom, controlled through logic, but still analyzed by knowledge. Not ignored, simply understood. 2. Anger. This was first anger at myself for making a stupid trade, then anger for the power going down, then anger at the market for my losses. Anger is then used toward revenge, revenge toward the market, revealed by the thought "I must now fight for my money back, I know better, I will make this damned market pay!" Also anger toward oneself for mistakes, which is then used to degrade your trading ability, which then creates fear of trading again, fear then creates anger as you get out early from a good trade, and so on and so forth, the death spiral is created. 3. Impatience. Particularly for a beginner such as myself. There are many things which I do not understand, and to learn I must simply sit and allow the market to teach me. Impatience can often lead to other emotions because it causes you to take a bad trade, then leading to fear and anger. This would be simpler to avoid, such as today I should not have even opened IB. As I said in the morning, I was unsure how it would go, and not trading will certainly not hurt me. Well, I hope I covered everything here, this turned out to be far longer than I had intended, but I have come to realize a tremendous amount of information about my trading today. I would most definitely recommend all beginner write a journal, whether it is online or not, just to help you analyze your trades, it is truly invaluable. Ben "Success tends to go not to the person who is error-free, because he also tends to be risk-averse. Rather it goes to the person who recognizes that life is pretty much a percentage business. It isn't making mistakes thats critical; it's correcting them and getting on with the principal task." - Donald Rumsfeld
First off Nabena I think it is excellent that you have decided to start journal here! I read over some of "the lessons learned" and I just wanted to throw some things at you... "Also pulling that crap of flipping trades if it doesn't work one way, just downright pathetic. I wish I would have lost more just so it would hit me harder just how stupid I was. " Nabena staying fluid while in a trade is essential! When in a position you have to see it from both sides, this is especialy true when your position is counter-trend... Do not immediately rule out spinning positions BUT at this stage in your career I think keeping things simple would be your best bet I will give you specific example of what I mean by this... This morning at approx 10 after 10 I faded the breakout of the 30min range @ 27... I stayed committed to letting the play work out but after she was unable to penetrate the prior high I started to prepare for the upside... I spun the position @ 28.5 to catch a nice move to upside... I am not at all implying that you should always belooking to spin positions and especialy not at this stage of your career BUT donot rule it out just yet... Stay fluid and see both sides of the market when you are in a position, especialy when your position is counter to the trend... I look foward to reading more of your journal in the future PEACE and good trading, Commisso
4. Allow the market to give you what it will. I have a trade set up, and it begins moving in my direction, I have no reason to get out. And yet I seem to think that if I have a set target that the market will move there and no more. Worse is that the set target is based on nothing to do with the market, just the fact that I want to get to a particular amount of money and no other reason. You are right on with this one Nabena... Do not let your attachments dictate your actions... Always remember that the market is indifferent and knows nothing of where your at in a position! IMO one of the keys that seperate the men from the boys is the ability to stay committed to letting your winners run... PEACE and good trading, Commisso
Thank you for the replies Commisso. I agree on flipping positions, in that circumstance it was a good trade. What I have done however, is used the logic that if it does not move my direction immediately, then it must therefor move the opposite direction. The only reason for the flip is that I am losing in that trade, and there is no other evidence to support the move being worth while. If there is a true analysis of the move, and evidence on a reversal then it is most certainly valuable to do so. While I was learning I did actually work a lot with more of a swing trading strategy (maybe 1-2 trades a day), and it always flipped, of course chop days can kill you with such a system, and I cannot handle the risk at this point. I also feel I need a breather between trades at this point in time. The War In my thoughts last night it came to me that I must operate under a state of war, a war upon myself. Not simply speaking of those problems which plague me, but taking action and fighting the battles. Discovering and understanding the opposition does nothing if you do not fight it. I must direct my anger and rage upon myself, toward all that which keeps me down. Perfection is the goal, though unattainable, I must strive for nothing less, that I may not become a slave to mediocrity. The war is fought with blood and tear, with cost and casualty, the battles lost must be directed so to fight with increasing fury, the battles won must be directed so to fight even harder yet to maintain that status. As for direct issues. 1. Overtrading. I will not trade more than once per 15 minutes from the closing of the last trade. Yes, I will likely miss trades, but I not fall to what happened yesterday (6 trades in 20 minutes). From trades of yesterday, I would have missed a -3,+0.5,-3.5,-2. What appears to be 8 points difference. Perhaps this is only in hindsight, but it is something I will attempt to solve the problem. I am currently learning to play guitar, so I will also keep it on my lap so to keep my hands busy, that boredom will not cause me to be impatient. 2. Do not trade against the trend. I am unsure of any practical way to avoid this aside from simply telling myself not to do so. I may make a note of it and put it on my monitor though. 3. I will not trade for the first half hour. Extended from my original 15 minutes. And I must not spend the time simply waiting to get in, but rather writing down what I see and what I think on paper. 4. Pulling winners early. I will work on a money management solution, any suggestions? Something set in place for a trailing stop perhaps. I will let the market come back down on my stops (I will likely trail them closely), rather than pulling the trade, so that I will get used to this. No target Limit orders though. I'll work on it today. Hopefully these will help with the emotional issues as well. particularly I think the 15 minute waiting rule will give me time to think and calm down if it becomes an issue. Ben P.S. Yes, I saw a war movie last night (Pearl Harbor), why do you ask?
Nebeno, You are doing fine. Do not overwhelm yourself with tasks and self-criticism. I agree with everything you've written except the part about not trading the first half hour. It's a tricky time but often your best single entry comes off or very close to the open. Personally, I like to trade only one direction during the day. If I'm flipping from one side to the other, there must not be much of a trend in palce, so why am I trading in the first place? Decide on a direction, using a longer time frame and your key indicators, such as the VIX. Then look for set-ups in that direction. When a trade goes to a profit, I try to hold them as long as possible, of course a profit cannot be allowed to go to a loss, and if a move gets very extended you have to protect profits. Taking 1 or 2 point gains will not be a winning game over time.
Firstly Nebeno, congratulations for taking on the admirable task of being a trader! I am very impressed with the quality of some of your observations about your early trading career - even more impressive given your age. Your reflections on your daily actions remind me of when I first had money on the line (in trading I mean, I played cards for much longer!). If trading in a state of rage/anger helps sharpen your focus and discipline (it did me) then use that. Consider, though, that there may be other analogies to trading that are more useful than that of "war". I prefer to think of the process as a game, if for no other reason that it's just more fun - as opposed to "slugging it out" with my "opponent". I know this sounds trite, but in my mind, it's a concept I've developed quite extensively. I just want to make the point that I believe the metaphors we habitually use have a big impact on the perceptions we form and hence the actions we take. Keep up the journal! Daniel
Daniel, thank you for the reply. I do want make it clear though that the war of which I speak is only against myself, not the market. This is actually an analogy I have used before in my way of thinking. I so often lack discipline, I can speak for an hour on something (trading or otherwise) that I absolutely know I should not and must not do, and yet only minutes later I can fall again. It's about self control. To further the analogy I have the image of a battle (think Braveheart), in the midst of this battle you look to see you greatest enemy partially across the field, and that is your target. With rage and fury you fight toward him, all others in your path are swiftly struck down. And in that course, any arrow which pierces you, or sword that strikes you, rather than weakening you, you become stronger, more filled with rage. The enemy of course is your goal here. A goal in which you know to be true, a goal you know you must complete, and by all logic is correct. You then put all of your being into achieving that goal. All thoughts which enter your mind that direct you otherwise must be destroyed. Not to mean you ignore wise opinion from others, again, it is only you fighting yourself. As for trading itself. It's interesting that before I found trading I was studying computer animation, intending to work at a computer gaming company, as I was also an avid game junkie for a number of years. When I found trading, one of the first things I enjoyed was the fact that this was indeed a game, however, the part which enticed me most was that there was not a finish to this game, no way to beat it. You can only continue to get better, but there is no end. Ben
Nebeno, You asked for suggestions on money management...I suggest you check out Tony OZ, his book and his web site. I am sure you will find sound advice there...although geared towards swing trading, the lessons he provides in money management are good ones. In his book he describes how he lost money, the things he did wrong and what he did to correct those mistakes. He provides a money management plan that he uses. There is the old adage that...just keep your losses much smaller than your profits...and everything will be ok....right? Wrong, there is much more to it than that.
Another good source of info on money management is Van Tharp's book, Trade your way to Financial Freedom (hope the hyperlink worked out). You can get it used at Amazon. The log is great, keep up the good work.